Brokerages’ Top Picks for Wednesday
A host of global and domestic brokerages have released fresh views on PB Fintech Ltd., Asian Paints Ltd., InterGlobe Aviation Ltd., Indraprastha Gas Ltd., HDB Financial Services Ltd., and more ahead of Wednesday’s trading session.
Most Bullish Fund Manager Survey of Past Three and a Half Years
Macro optimism is at its highest since August 2021, driven by a ‘run-it-hot’ belief. Allocation to stocks and commodities is at its highest since February 2022, with cash levels at a record-low 3.3%. The December Fund Manager Survey has pushed the BofA Bull & Bear Indicator up to 7.9, which is close to a ‘sell signal’. However, bullish positioning remains the biggest headwind for risk assets.
Asian Paints: A Significant Turnaround
Store visits and interaction with dealers corroborate that Asian Paints has significantly upped its game and its engagement with dealers. Volume growth of high single digits/double digit is likely to continue in Q3 as well, which is a significant turnaround considering the overall demand environment remains still tepid. Expect Q3 EBITDA growth of 6% and PAT growth of 10%.
PB Fintech: Insurance Amendment Bill, 2025
The Insurance Amendment Bill, 2025 empowers IRDAI to set caps on commissions. IRDAI is mulling a shift to a deferred commission structure instead of the current upfront commission structure. IRDAI is also exploring an overall cap on insurance commissions. Commission caps should not necessarily be detrimental for PB Fintech, as putting a cap will not necessarily impact the take rates. The actual impact will depend on the level at which the new caps are set.
IndiGo: Impact of 10% Capacity Cut
IndiGo is issuing vouchers to affected passengers and incremental information on matching pilots with new capacity. The impact on FY27E/28E is not significant. Remain positive on IndiGo given its dominant position, its lowest cost structure, and highest visibility on supply addition.
PNB Housing: Upgrade to ‘Buy’
Upgrade to ‘buy’ from ‘neutral’ with a target price of Rs 230 from Rs 215. Margins to get support from lower tax and transmission tariffs. DTC transition nearing end to aid volume growth. Demand trend could recover as DTC transition is near-completion. Risk reward turns favourable post sharp correction.
Insurance Sector: IRDAI’s Enhanced Powers
IRDAI’s enhanced powers over investments, commissions, and expenses were welcomed. This enables stronger governance, more transparency, and sustainable growth. Enabling provision for a merger between an insurer and a non-insurer was also welcomed. Industry has varied views from commissions being not so high to support for transition to commission deferral.
Conclusion
In conclusion, the Indian stock market is expected to be volatile in the coming days, with various factors such as the Insurance Amendment Bill, 2025, and the performance of key sectors such as insurance and aviation. Investors should keep a close eye on the market and make informed decisions based on their individual risk tolerance and investment goals.